Correlation Between United Rentals and LG Clean
Can any of the company-specific risk be diversified away by investing in both United Rentals and LG Clean at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining United Rentals and LG Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and LG Clean Water, you can compare the effects of market volatilities on United Rentals and LG Clean and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in United Rentals with a short position of LG Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and LG Clean.
Diversification Opportunities for United Rentals and LG Clean
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and GLUG is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and LG Clean Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Clean Water and United Rentals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on United Rentals are associated (or correlated) with LG Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Clean Water has no effect on the direction of United Rentals i.e., United Rentals and LG Clean go up and down completely randomly.
Pair Corralation between United Rentals and LG Clean
Considering the 90-day investment horizon United Rentals is expected to generate 2.32 times more return on investment than LG Clean. However, United Rentals is 2.32 times more volatile than LG Clean Water. It trades about 0.18 of its potential returns per unit of risk. LG Clean Water is currently generating about 0.23 per unit of risk. If you would invest 78,451 in United Rentals on September 4, 2024 and sell it today you would earn a total of 7,254 from holding United Rentals or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 90.91% |
| Values | Daily Returns |
United Rentals vs. LG Clean Water
Performance |
| Timeline |
| United Rentals |
| LG Clean Water |
United Rentals and LG Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and LG Clean
The main advantage of trading using opposite United Rentals and LG Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, LG Clean can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in LG Clean will offset losses from the drop in LG Clean's long position.| United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
| LG Clean vs. Vanguard FTSE Emerging | LG Clean vs. UBS ETF MSCI | LG Clean vs. VanEck Solana ETN | LG Clean vs. iShares Corp Bond |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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